What Should Be the Price of a Stock That Offers

question 62

Multiple Choice

What should be the price of a stock that offers a $4.32 annual dividend with no prospects of growth,and has a required return of 12.5%?

• A) $0
• B) $4.86
• C) $34.56
• D) $30.24

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Definitions:

FICA-OASDI

The Federal Insurance Contributions Act tax for Old-Age, Survivors, and Disability Insurance, which funds Social Security.

FUTA

The Federal Unemployment Tax Act, which imposes a payroll tax on businesses, used to fund state workforce agencies.

FICA-OASDI

The Federal Insurance Contributions Act - Old Age, Survivors, and Disability Insurance tax deducted from employee wages for Social Security and Medicare.

Kitchen Salaries

The total amount of wages paid to employees working in a kitchen over a specific period.